MAKING NET ZERO A REALITY - OUR NET-ZERO ACTION PLAN 20221 - Sarasin & Partners
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MAKING NET ZERO
A REALITY
OUR NET-ZERO ACTION PLAN 20221
FOR US CLIENTS
If you are a private investor, you should not act or rely on this document but
should contact your professional advisor
This report serves as our first Action Plan under our Net Zero Asset Managers’
Commitment. See https://www.netzeroassetmanagers.org/#our_commitment.
We will review our Action Plan at least every five years.
1 | Sarasin Net Zero Action Plan 2022
CONTENTS 01 06
4 INTRODUCTION 28 POLICY ADVOCACY AND MARKET OUTREACH
02
6.1 CLIMATE CHANGE REQUIRES SYSTEM-WIDE ACTION 28
6.2 OUR APPROACH TO DELIVERING IMPACT 28
6.3 COLLABORATION IS KEY IN THE POLICY SPHERE 28
6 OUR COMMITMENT TO ALIGN WITH A 1.5°C 6.4 LEADERSHIP WHERE WE CAN ADD MOST VALUE 29
PATHWAY 6.5 MEDIA OUTREACH 29
6.6 RECENT POLICY IMPACT 29
03 07
8 STRATEGY, TARGETS AND GOVERNANCE
31 CLIENT EDUCATION AND SOLUTIONS
3.1 1.5°C ALIGNMENT IS CONSISTENT WITH OUR STEWARDSHIP PHILOSOPHY 8
7.1 OUR APPROACH IS EMBEDDED IN OUR STEWARDSHIP PHILOSOPHY 31
3.2 SARASIN’S PATHWAY TO 100% AUM COVERAGE 9
7.2 REGULAR REPORTING ON CLIMATE EXPOSURES AND ENGAGEMENT IMPACTS 31
3.3 FINANCED EMISSIONS PATHWAY 10
7.3 OTHER EDUCATIONAL OUTREACH 33
3.4 HIGH-LEVEL METHODOLOGY 12
7.4 PRODUCT DEVELOPMENT 34
3.5 GOVERNANCE: OVERSIGHT, CONTROLS AND REPORTING 13
04 08
15 STRATEGIC ASSET ALLOCATION 38 OPERATIONAL COMMITMENT
4.1 MACRO-ECONOMIC ASSUMPTIONS AND CLIMATE RISK 15 8.1 CARBON FOOTPRINT AND TARGETS 38
4.2 BOTTOM-UP ANALYSIS IS THE PRIMARY TOOL FOR DELIVERING 8.2 GOVERNANCE AND STRATEGY 39
NET-ZERO ASSET ALLOCATION 15
8.3 METHODOLOGY 39
05
8.4 TIMELINE 40
16 NET-ZERO ALIGNMENT THROUGH INVESTMENT
AND ENGAGEMENT 09
41 CONCLUSION
5.1 MAPPING 1.5°C ALIGNMENT - INITIAL ALIGNMENT ASSESSMENT 16
5.2 ENGAGEMENT APPROACH 20
5.3 CLIMATE SOLUTIONS 22
5.4 DIVESTMENT APPROACH 26
5.5 PORTFOLIO MONITORING 27
2 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 3
1
INTRODUCTION
In 2015, the world set itself a target to keep temperature
increases well below 2°C, and ideally 1.5°C (the Paris Climate
Building on this experience and our heightened conviction that
more needed to be done, in 2019, we published our firm-wide
HOW TO READ THIS REPORT
Agreement goals). This was in response to overwhelming Climate Pledge, which committed us to align our investment This report is set out as far as possible
scientific evidence that the climate is warming at an and stewardship activities with achieving the Paris Agreement in line with the Net Zero Investment
unprecedented rate, and the impacts for millions of people are goal of keeping temperature increases well below 2°C. Framework (NZIF) as applicable to an active
likely to be devastating. asset manager.4
In December 2020, we became a founding signatory to the
Since then, data shows that our planet is warming even faster Net Zero Asset Managers’ Commitment (NZAM).2 Today, we are We start with the NZAM Commitment itself
than previously thought and there has not been enough publishing this Action Plan to provide greater detail on how we in Section 2, including the ten detailed sub-
concerted action. The dangers of exceeding the 1.5°C threshold will meet our NZAM Commitment. commitments.
are graver than we had imagined. We must collectively ensure
net carbon emissions come down to zero by 2050 if we wish In Section 3, we explain our strategy for
to keep temperature increases to 1.5°C, and by 2070 for a 2°C ACTIVE OWNERSHIP alignment with a 1.5°C pathway at a high
level, including targets for asset coverage,
cap. And the longer we delay action and thus we exceed today’s
At the heart of our approach sits our commitment to driving targets for financed emissions (emissions
emission limits, the sooner we will need to reach net zero.
positive change. associated with the underlying entities
What is required is an unprecedented economic and societal where we hold securities), our high-
We believe investors have important rights, but also
transformation – the entire world must be entirely weaned off level methodology and our governance
responsibilities to act through voting and engagement with
carbon within three decades. This means phasing out fossil- framework for ensuring implementation.
companies, making public calls for policy change and building
fuel dependence and other carbon-emitting activities across
coalitions with like-minded stakeholders. We invest time Sections 4 and 5 provide detail on how we
all sectors of the economy. This means stopping continued
and energy in fulfilling these responsibilities, and reporting will integrate a net-zero pathway into our
destruction of natural habitats that act as critical carbon sinks
transparently on our actions and the impacts we achieve, so we investment process – both at a macro level
(and are also home to vital life-supporting biodiversity). The
can be held to account. and in our bottom-up security analysis.
challenge is enormous, and every day counts.
Section 6 explains our approach to policy
We will vote against company directors and advocacy and how we aim to catalyse
A 1.5°C-ALIGNED APPROACH auditors where we see inadequate action to positive change across the entire market,
align strategies and operations with a 1.5°C rather than restricting ourselves to the
Asset managers are in a uniquely important position to securities that we hold for clients.
help drive this climate transition. As stewards of capital, we pathway, and are public where we do so to put
decide where to deploy savers’ capital – whether we are the spotlight on poor performers. As we seek to align all our discretionary
buying shares or debt issued by a wide range of entities. We assets with a net-zero outcome, the
also have an ability to influence how companies deploy their provision of both client education and
capital on the ground. CLIMATE ACTIVE ADVISORY PANEL3 appropriate investment solutions is key. We
Our work relating to climate change is guided by our Climate describe our approach in Section 7.
In the end, what matters is not whether a Active Advisory Panel. The panel comprises individuals with Finally, we outline in Section 8 how we are
portfolio is carbon neutral. What matters is that deep experience of activist investment, climate change, the practising what we preach by ensuring our
the world achieves net-zero carbon emissions. Paris Accord and the energy sector. Their involvement is helping own operations are aligned with a net-zero
This reality underpins our approach to net-zero to ensure that we do what we say when it comes to climate future.
change, but above all that we aim high. Rather than narrowing
alignment: we focus at all times on real-world our focus, we look at the bigger picture and levers we can pull
emission reductions in the context of delivering to help to catalyse positive change.
enduring value to our clients.
Our focus on climate change and our responsibility to act
is not new. In 2017, Sarasin & Partners launched a Climate
THE GREATEST RISK IS THAT OF INACTION
Active strategy for UK charity clients. The goal was to provide Climate change is not going away, and the greatest risk
an investment solution that both sought to manage risks to today is one of inaction. The commitment to net zero that we
capital associated with climate change, but also aimed to detail in this document seeks to meet our clients’ and other
play a catalytic role in promoting action on climate change. stakeholders’ expectations for how an asset manager can play 2
Net Zero Asset Managers Initiative
We explicitly set out to drive broader policy and market-wide its part in protecting our climate for generations to come. 3
Please see Section 5.2.3 for further details
solutions. on our Climate Active Advisory Panel.
4
NZIF guidance
4 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 5
2
OUR COMMITMENT TO ALIGN WITH A 1.5°C
PATHWAY5
Given our commitment to stewardship,
it was natural that we would become a
founding signatory to the Net Zero Asset TEN DETAILED COMMITMENTS UNDER
Managers’ Commitment (NZAM), launched
in December 2020. This commits us to:
NZAM
“support the goal of net-zero FOR ASSETS COMMITTED TO BE MANAGED IN LINE • Implement a stewardship and engagement strategy,
greenhouse gas emissions by 2050, in with a clear escalation and voting policy, that is
WITH THE ATTAINMENT OF NET-ZERO EMISSIONS BY
line with global efforts to limit warming consistent with our ambition for all assets under
to 1.5°C…[and] to support investing 2050 OR SOONER (UNDER COMMITMENT B) management to achieve net-zero emissions by 2050 or
aligned with net-zero emissions by 2050 • Set interim targets for 2030, consistent with a fair sooner.
or sooner.” share of the 50% global reduction in CO2 identified
• Engage with actors key to the investment system
as a requirement in the IPCC special report on global
Specifically, Sarasin & Partners is including credit rating agencies, auditors, stock
warming of 1.5°C.
committed to: exchanges, proxy advisers, investment consultants, and
• Take account of portfolio scope 1 & 2 emissions and, data and service providers to ensure that products and
a) Work in partnership with asset owner services available to investors are consistent with the
to the extent possible, material portfolio scope 3
clients on decarbonisation goals, aim of achieving global net-zero emissions by 2050 or
emissions.8
consistent with an ambition to reach sooner.
net-zero emissions by 2050 or sooner • Prioritise the achievement of real economy emissions
across all assets under management. reductions within the sectors and companies in • Ensure any relevant direct and indirect policy advocacy
which we invest. we undertake is supportive of achieving global net-zero
b) Set an interim target for the emissions by 2050 or sooner.
proportion of assets to be managed • If using offsets, invest in long-term carbon removal,
in line with the attainment of net- where there are no technologically and/or financially
zero emissions by 2050 or sooner. viable alternatives to eliminate emissions. ACCOUNTABILITY
c) Review our short-term target • Publish TCFD disclosures, including a climate action
• As required, create investment products aligned with
annually, with a view to ratcheting up plan, annually, and submit them to the Investor Agenda
net-zero emissions by 2050 and facilitate increased
the proportion of AUM covered until via its partner organisations for review to ensure the
investment in climate solutions.
100% of assets are included.6 approach applied is based on a robust methodology,
consistent with the UN Race to Zero criteria, and action
Underneath this high-level NZAM ACROSS ALL ASSETS UNDER MANAGEMENT is being taken in line with the commitments made here.
commitment sit ten more detailed
• Provide asset-owner clients with information and
commitments, as outlined on the
analytics on net-zero investing and climate risk and
following page.7
opportunity.
In subsequent sections we set out
our Action Plan for meeting these
commitments. While our approach will
inevitably evolve over time to reflect
the latest science and expectations, as
well as improving data and more refined
methodologies, our commitment to do 5
This commitment supersedes our Climate Pledge first 7
https://www.netzeroassetmanagers.org/#our_commitment
what we can to align with a sustainable published in 2019.
and stable planet will remain firm. 8
GHG emissions are classified as “scope 1”, direct emissions
6
We include discretionary assets here, as we have no ability from owned or controlled sources; “scope 2”, indirect emissions
to determine how non-discretionary assets are managed. from the generation of purchased energy; “scope 3”, all indirect
However, we are committed to informing all clients, emissions (not included in scope 2) that occur in the value
including both discretionary and non-discretionary, about chain of the reporting company, including both upstream and
the importance of Paris-alignment to delivering long-term downstream emissions.
sustainable returns. Please refer to Section 2 for further details
on covered assets, and Section 6 for a fuller discussion of our
client communication strategy.
6 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 7
3
STRATEGY, TARGETS AND GOVERNANCE9
FIGURE 1: % OF SARASIN AUM 3.2 SARASIN’S PATHWAY Non-discretionary/encumbered assets
are not included in our commitment:
TO 100% AUM COVERAGE As noted above, we are only able to
make this commitment for the assets
3.1 1.5°C-ALIGNMENT IS CONSISTENT WITH OUR 100% AUM commitment by 2025:
over which we have investment and
Listed equity >50% We are committed to gradually
STEWARDSHIP PHILOSOPHY expanding our net-zero approach
stewardship discretion, or where there
are no other legal impediments, such as
This Action Plan describes how we will use the levers at our disposal to to 100% of the assets over which we
Fixed Income 10-20% tax requirements that prohibit the sale
support alignment with a 1.5°C temperature pathway. We are embedding have unencumbered investment and
of certain assets.
our net-zero goal in how we deploy capital (our investment process), our stewardship discretion by 2025. This
engagements with the companies we invest client capital into, how we Cash
3: STRATEGY, TARGETS & GOVERNANCE
FIGURE 3
Where we are an equity
holder, we will press
companies to invest
sustainably, and we will
vote in line with these
engagements
3.3 FINANCED EMISSIONS by, on average, 2050.13 While the precise
slope of this pathway will depend on
routinely for board directors, the auditor,
the issuance of new shares etc. This
PATHWAY12 changes in our industry and geographic provides us with the ability to influence We further commit:
exposure as we buy and sell securities the entity’s capital deployment. We
over time, it will be consistent with the also have other levers to impact board • To avoid providing fresh capital for fossil-fuel extraction • To use our powers as shareholders and creditors with
3.3.1 NEVER FINANCE HARMFUL central IPCC 1.5°C scenario of achieving decision-making such as engagement, or energy generation principally powered by fossil fuels, the aim of preventing unsustainable investment by the
CLIMATE OUTCOMES a 50% real-world absolute reduction by public outreach, regulatory complaints unless they are verifiably carbon neutral (for instance due underlying companies, and thereby deliver materially larger
2030. and filing shareholder resolutions. to use of carbon capture and storage), or an engagement emissions reductions than would otherwise transpire.
In keeping with our commitment to
We discuss these in greater details in target with clear time-bound 1.5°C-alignment objectives.15 Where we are an equity holder, we will press companies to
1.5°C-alignment, we aim to cease
In setting our targets to support global Sections 4 and 5. This includes investment in any new issue of shares or invest sustainably, and vote in line with these engagements.
providing any new finance to activities
not aligned with this temperature decarbonisation, we are clear that bonds. We further commit not to purchase such bonds We will vote against company accounts, auditors, or chairs
pathway, and to use our powers as our goal is to bring down real-world In our holdings of credit (almost 14% in the secondary market which might encourage future of audit committees that sign off accounts that fail to
shareholders and creditors to stop emissions, not merely to reduce our AUM as of 31 August 2021), likewise, issuance of these securities.16 properly reflect material climate risks. We will furthermore
companies making or financing portfolio-level emissions.14 there is little ‘fresh capital’ provided. vote against all relevant directors, including the Chair, that
investments which are unsustainable. Purchases in the secondary market fail to act sufficiently robustly on climate change.
dominate. Even where we acquire new
In recognition of the growing focus on thermal
In the vast majority of cases, we are not 3.3.2 CONTEXT: HOW EQUITY AND issues (normally between 1% and 5% of
coal and tar sands, we wish to be clear • To seek commitments from other key market actors that
purchases by volume), in most cases,
providing fresh capital to companies CREDIT MARKETS INFLUENCE THE that these will naturally be captured by our they align their activities with a 1.5°C pathway. This will
these refinance maturing proceeds. include other providers of capital (banks and other fund
through the purchase of new share ROAD TO NET ZERO overarching policy.
managers), and entities that have a market-wide impact on
issuance or credit. We normally acquire
securities in the secondary marketFs. In the equity markets, which makes financing (such as auditors and proxy agencies).
We will not provide fresh capital to activities
However, in this case we are gaining a up just under 80% of our AUM as of 31 3.3.3 OUR PATHWAY COMMITMENT not aligned with a 1.5°C temperature pathway,
voice in how companies deploy their August 2021, by and large we do not unless we can present a compelling case • To ensure our own operations, including wherever possible
Against this backdrop, we commit to a
capital, and we intend to use our voice provide fresh capital for investment. that this investment would permit us to emissions embedded in our supply chain, are carbon
downward trajectory in emissions for
to ensure companies stop allocating Less than 1% of our equity purchases catalyse net-zero alignment in the entity, and neutral from 2022. Over time, we will bring down our
all our assets in line with the IPCC 1.5°C
fresh capital to activities that are are for new issues. We are buying thus wind down these activities. Any such absolute emissions, and reduce our reliance on carbon
pathway for achieving a 50% reduction
not aligned with a 1.5°C temperature shares in the permanent capital of the investment would be accompanied by a time- offsets.
by 2030, and ultimately reaching net
pathway. company. limited engagement window for achieving
zero by 2050. The pathway will depend
on changes to the composition of demonstrable impacts. Of course, we already Measurement: We expect to measure emissions intensity (for
Taken together, our investment and Thus, the key mechanism through which investments we manage, in particular apply coal and tar sands exclusions on instance tCO2e/$ revenue or tCO2e/EVIC, the preferred metric
stewardship activities aim to ensure our we impact the deployment of capital our industry and geographic exposure. request for certain segregated mandates and defined by the Partnership for Carbon Accounting Financials) to
financed emissions come down in line on the ground is through our influence Our focus is always on driving particular products. track emissions performance over time, which normalises for
with a 1.5°C pathway, currently believed over the governance of the company. reductions in emissions in the real world, the size of underlying companies. We will also seek to measure
to be consistent with reaching net zero This can be achieved in several ways. In not just our portfolios. our financed emissions against industry and regionally-
most jurisdictions, shareholders vote adjusted benchmarks to avoid us automatically divesting
10 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 11
3: STRATEGY, TARGETS & GOVERNANCE
from more carbon-intensive sectors where we believe our temperatures, or to help us to adapt to the warming that Asset Management – responsible for embedding climate risk
engagement can deliver a larger emission reduction, and is already coming. We see tremendous opportunity for monitoring and net-zero alignment into our global equities,
thus beneficial climate impact.17 We will be finalising our companies positioned to gain from these trends. multi-asset and stewardship processes. This includes
measurement approach during the course of our first year of ensuring net-zero scenario analysis through our in-house
implementation.18 Where companies are not yet fully aligned with a more Climate Value at Risk (CVAR), 1.5°C-alignment assessments, and
stable climate, we press them to transition their business proactive engagement work.
Measurement period: We expect to measure our financed strategies to align with a 1.5°C pathway. Here we prioritise
carbon intensity using a rolling three-year average, or allow for those entities that have the greatest climate impact – either Risk – responsible for developing and implementing
a divergence range around the central pathway in any specific directly through their operational emissions or indirectly by appropriate climate risk monitoring tools for tracking
year. Again, we are explicitly building in this flexibility to permit facilitating carbon-intensive activities. Our goal is to achieve exposures and net-zero alignment at a portfolio level against
us to focus on bringing down real-world emissions through the greatest absolute real-world emission reduction. targets. These are communicated to asset management
stewardship, rather than creating the impression of emission through monthly CIO/Risk Review Meetings and the Investment
reduction through divestment. Any increase in our carbon We undertake policy outreach to catalyse better regulations, Risk Committee.
footprint above our central pathway would be justified by a fiscal measures or other market practices, and thereby deliver
detailed explanation for why we believe this is consistent with system-wide change in line with achieving a 1.5°C outcome. Client teams – responsible for reporting climate risks and
our net-zero goal, and regular reporting to track progress. opportunities to clients alongside broader investment
We will report transparently and regularly on our efforts and performance.
Treatment of offsets and negative emissions technology achievements, as well as our failures. We expect to be held to
(NET): As required under the NZAM commitment (see page account, just as we hold management teams and Boards of Operations – responsible for ensuring Sarasin’s operations
7), we are cautious in our reliance of carbon offsets, though Directors to account for their climate conduct. are net zero, including wherever possible scope 3 emissions
we do believe they have a role to play. Where we identify a related to travel and our supply chain, and with a focus on
material use of offsets by underlying entities, we will challenge More detail on how we implement the key elements of this reducing absolute emissions over carbon offsets.
management/the board to demonstrate why offsets need approach follow in Sections 3 through 6.
to be used instead of emission reduction approaches. We Internal audit/assurance – responsible for checking that our
will seek evidence that the anticipated carbon removal will NZAM processes are being properly implemented through
be long-lived, as well as plan for leakage risk mitigation. We
similarly take a precautionary approach to offsets in our own 3.5 GOVERNANCE: OVERSIGHT, CONTROLS routine internal audits. We will be initiating this process in
2022, with external audit introduced in subsequent years.
operational emission reduction plans as detailed in Section 8. AND REPORTING
The implementation of this net-zero commitment is overseen Remuneration: To ensure adherence to our commitment,
Reporting: We will report quarterly to clients on adherence to incentive frameworks will be reviewed for alignment with our
these commitments as detailed in Section 7. by the Board, with routine monitoring undertaken by our
Stewardship Steering Committee (SSC) with input from net-zero investment strategy.
Asset Management, Risk and other departments where
Ratcheting-up mechanism: We will review our goals for The Board will report on the implementation of the net-zero
relevant. Oversight of client reporting is monitored by our
reducing financed emissions at least every five years. This investment commitment following the TCFD framework,
Client Relationship supporting team, with our operational
will take account of past achievements, new science and annually.
decarbonisation strategy falling under the purview of the
changing policy and client expectations.19
Chief Operating Officer.
Responsibilities for implementation are delegated to the
3.3.4 WHERE WE WILL DIVEST relevant units within the business, as follows:
We have underlined our view that engagement to drive real-
world emission reductions, rather than automatic divestment, Investment Strategy Group – responsible for consideration
is likely to be more effective in bringing down real-world of climate risks in the formulation of macroeconomic
emissions. We will, however, divest from heavy emitters where assumptions underpinning Strategic Asset Allocation (SAA) and
capital is at risk and this is in our clients’ interests. the consideration of new asset classes. This work is delegated
to the joint ISG-SSC working group.
Our approach to assessing the materiality of climate risks, and
whether or not to engage to drive positive change, is outlined
below and in more detail in Section 4.
3.4 HIGH-LEVEL METHODOLOGY
Our methodology for implementing our net-zero commitment
is outlined in greater detail in the following sections. At a
high level, the key elements are summarised in figure 3.
This approach is strongly aligned with our long-standing
investment philosophy, and our goal to deliver enduring value
in our clients’ interests.
We invest in securities issued by entities that are net-zero-
aligned, or have the potential to become aligned. We also
seek out entities that are proactively developing solutions
for climate change – either to enable us to mitigate rising
12 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 13
4
STRATEGIC ASSET ALLOCATION20
Sarasin & Partners offers a range of We keep abreast of emerging analysis
equity and multi-asset investment from entities such as the IMF and
9
This section combines “Governance & Strategy” and “Targets all such cases we will press for winding down harmful activities solutions for clients. Decisions on The Network of Central Banks and
and Objectives” under the NZIF. and encourage investment in clean alternatives which offer strategic asset allocation (SAA) pertain Supervisors for Greening the Financial
appropriate rewards. to the latter, which accounts for 64% of System (NGFS) and use this research
https://sarasinandpartners.com/wp-content/
10
our total AUM (end of August 2021). to stress test our assumptions. Where
uploads/2021/03/Sarasin-UK-Stewardship-Code-2020.pdf We do not include in this exclusion securities issued by banks
15 we can get a satisfactory degree of
or other financials. We recognise that financial organisations confidence around the data, we will
We apply our methodology to all material holdings. These
4.1 MACROECONOMIC update our central expectations.21
11
provide finance for fossil fuels, and thus we are and will
include all those names that appear on our internal buy lists
that feed into all our core investment strategies. This covers
continue to actively engage with these entities as part of our
broader net-zero commitment.
ASSUMPTIONS AND We are clear that, despite the
roughly 91% of all our unencumbered AUM. With regards to
high impact entities, we are using NZIF guidance, to include: TPI We include secondary market purchases of credit due to
16
CLIMATE RISK inherent uncertainties, climate
change represents a structural shift
covered sectors, banks, real estate, and companies identified the high frequency of bond issuance by fossil-fuel-related The main way we seek to ensure our SAA to the world’s economic condition.
process takes account of climate risks Consequently, we are more likely to be
on the CA100+ focus list. companies and, thus, the greater impact we can potentially
is through stress testing of our long- wrong in our projections if we ignore its
have on companies’ cost of capital for new issuance through
12
Our financed emissions refer to greenhouse gas emissions term GDP growth projections to reflect impacts than if we seek to include them,
these secondary markets. however difficult that may be.
associated with our clients’ underlying entities. This both decarbonisation and the physical
impacts from climate change.
encompasses emissions linked to securities we have acquired In the end, we need to bring absolute emissions down, as a
17
in the secondary market as well as new issues. central part of our approach is to engage with companies to
drive real world reductions, not simply divesting to reduce our
When GDP assumptions are changed,
this feeds through to our expected
4.2 BOTTOM-UP ANALYSIS
The precise net-zero target date depends on how quickly the
IS THE PRIMARY TOOL FOR
13
portfolio emissions. This approach is in line with NZIF guidance, returns for our main asset classes,
remaining ‘carbon budget’ associated with a 1.5°C temperature which recognises the dangers of targets that drive automatic
goal is used up. Based on the latest analysis by IPCC, a 2050 date divestment.
which in turn will influence our
allocation to equities, fixed income
DELIVERING NET-ZERO
for net zero will achieve the goal. If we fail to reduce emissions
as projected, however, it is possible that the date could 18
Entity-level emissions data are not always available today,
and alternatives. We review these core ASSET ALLOCATION
assumptions every two years.
move earlier. Likewise, faster emission reduction could see it which impedes portfolio-level emissions calculation. This is While we consider climate risks in our
move later. It is also important to stress that the actual 1.5°C particularly true in the case of securities issued by entities with SAA process as outlined above, given
When considering climate risks, it
consistent pathway will vary by geographic region, sector and no publicly-listed equity, such as emerging market renewables, the nature of our business, the primary
is important to consider different
mechanism for ensuring our clients’
industry. Offshore Transmission Owners, etc. Where relevant, we will scenarios from business as usual and
assets are allocated in alignment with
engage with all entities to improve disclosure, and where data expected warming in excess of 3°C,
14
An important consideration in setting our pathway is that a 2050 net-zero trajectory is through
is not available we will estimate the likely carbon intensity, and/ to the 2050 net-zero pathway where
we avoid actions that may reduce our own firm’s financed our bottom-up security analysis and
or make a judgement as to whether the entity is aligned with warming will be kept to 1.5°C. In most
engagement work. We turn to the
emissions without having any real-world impact, or worse the Paris goals. cases, there will be GDP impacts, but the
methodologies that will govern our
that may result in higher real-world emissions. For instance, precise magnitude is unknown, so must
approach in the next section.
we would quite easily reduce our own portfolio emissions by 19
Current 2050 net-zero targets are an average view of what be estimated. This uncertainty around
selling the securities of companies who were committed to is required based on scientific understanding for achieving a the GDP feed-through mechanisms is the
achieving net zero and were implementing that strategy, but 1.5°C cap on temperature rises. It is possible that this target main challenge in integrating climate
risks, and a net-zero scenario, into our
whose current emissions were high. However, if this means will need to be brought forward in the event that the world
economic forecasting.
we sell securities to another investor that has no net-zero continues to overshoot emissions pathways.
commitment, and supports the expansion of the underlying
entity’s carbon-intensive activities, this would exacerbate
climate change. So, for example, we may hold securities in
carbon-intensive entities, such as building materials, heavy
industry, transportation and even oil and gas companies, but in
20
Under SAA, a number of KPIs identified See for instance: https://www.ngfs.net/
21
in the NZIF are not relevant for Sarasin. ngfs-scenarios-portal/
The key mechanism for achieving our
net-zero commitment comes through
our bottom-up process as detailed
elsewhere. This includes the identification
of climate solutions under Alternatives.
14 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 15
5
NET-ZERO ALIGNMENT THROUGH
INVESTMENT AND ENGAGEMENT22
The question of how to measure 1.5°C
or net-zero alignment for an investee
touch on our approach to tracking
portfolio performance. A summary of the
1. Aligned today; 5.1.1 1.5°C-ALIGNMENT TODAY OXFORD MARTIN SCHOOL PRINCIPLES FOR
2. Not aligned today but transitioning – OXFORD MARTIN SCHOOL CLIMATE-CONSCIOUS INVESTMENT
entity is still evolving, and there is still approach is provided in figure 4.
no single or simple metric agreed by all or well-placed to transition - we can PRINCIPLES+
envisage a profitable pathway to The following Principles provide a reach net zero. For companies that
parties that denotes a pass or fail. This To determine whether or not a company
is primarily because it requires forming 5.1 MAPPING net zero; or is 1.5°C-aligned, we start with the Oxford
framework for engagement between
climate-conscious investors and
provide a carbon-intensive service
or fuel for which there is no currently
judgements about the future emissions
pathway of an entity. Companies
1.5°C-ALIGNMENT - 3. Not aligned today with little
Martin School Principles for Climate-
Conscious Investment (see box).
companies across the global economy. available substitute, a clear plan
are dynamic and constantly change INITIAL ALIGNMENT prospect for alignment. Building upon the science of long-term
climate change, they focus on how
is required for contributing to the
development and deployment of
business plans and strategies. In most
cases, we simply cannot say today
ASSESSMENT Where the entity gets allocated will
To these, we add a fourth criteria,
together referred as "OMS+:24
investments contribute to the global substitutes or remediation measures.
determine whether we hold, divest stock of cumulative carbon dioxide For products and services for which
that a given company will get to net Our methodology is intended to capture immediately or engage to drive change. 1. Board-level commitment to the Paris emissions, complementing other zero-carbon substitutes already
zero before 2050. This is especially true companies that are aligned with a
Climate Agreement and specifically measures, such as carbon footprinting, exist, a company should have a clear
where we include scope 3 emissions – net-zero pathway today and – critically – In what follows, we outline our criteria
an appropriate net-zero target that focus on emission flows. strategy and timescale for adopting
or those that are linked to the entity’s also companies that have the potential for assessing 1.5°C-alignment today,
consistent with a 1.5°C temperature them. If carbon dioxide removal plays
upstream and downstream value to align. This is because our goal is not and also our approach to determining
goal. a substantial role in the company’s
chain.23 We can only form judgements just to buy companies that are low companies’ ability to transform. Both 1. COMMITMENT TO NET-ZERO plans, how will it be achieved, paid
around the likelihood of this happening. carbon today, but to press high-carbon steps require judgement, but the latter 2. Interim targets to measure and EMISSIONS for, monitored and maintained in
emitters to bring down their emissions is particularly challenging, and demands report progress that are aligned
Against this backdrop, we outline Net global emissions of carbon dioxide perpetuity?
to deliver a safer planet for us all deep sector and company knowledge. with the International Panel on
below our approach to determining tomorrow. We believe there is significant Knowing the potential for companies must reach zero to stabilise global
Climate Change (IPCC) – which,
1.5°C-alignment, and then based value to be captured by our clients from to undertake a Paris-pivot is critical to temperatures, whether at +2°C, +3°C 3. QUANTITATIVE MEDIUM-TERM
on average, translates into a 50%
on an initial alignment assessment, this approach. determining whether to undertake an or any other level. All industries must
we explain how this translates into engagement. We turn to this in the next
reduction by 2030; covering scopes
eventually reach net-zero emissions, TARGETS
1-3 where possible.
investment/ divestment decisions Consequently, our mapping process section. even if some industries do so before Mid-term targets (for example, for
and engagement activities. We also involves allocating companies into one 3. A credible and profitable business others. Companies should commit to a 2030) that are directly relevant
of three buckets (figure 4): plan consistent with delivering date (or a temperature increase, such to achieving a net-zero business
these goals, supported by capital as 1.5°C or “well below 2°C”) before model, such as the rate and long-
expenditure. which the net CO2 emissions associated term trajectory of reductions in
FIGURE 4: NET-ZERO-ALIGNMENT THROUGH INVESTMENT AND ENGAGEMENT with their activities (including both CO2 emissions, are vital to assess
4. 1.5°C-aligned accounting and supply chains and products sold) will compatibility with the Paris Agreement.
audit that underpins a credible be zero. Companies should develop and If a company has a plan for a
net-zero business plan. We add publish a net-zero transition plan. If the progressive transition to net-zero
this fourth criteria to the OMS company envisages a substantial role emissions, investors should be able
principles as we view this as an for offsetting of residual emissions, to monitor their progress to ensure it
indicator of credibility. If the entity is what is the offset mechanism, is it is consistent with minimising risks to
predicating its financial statements reliable and available at sufficient scale future climate and risks to future asset
on assumptions that are not for a global transition, and who is going owners, consumers and taxpayers.
consistent with a stable planet, then to pay for it? The company’s public Global temperatures are projected by
its business plan and incentives are statements and support for other the IPCC’s Fifth Assessment Report to
unlikely to be aligned with shifting to organisations and lobby groups should reach around 1.2°C above preindustrial
that pathway.25 be consistent with advancing public, by about 2030. By this level of warming,
political and corporate action towards emissions scenarios approximately
The last two criteria together effectively net-zero emissions. consistent with the 1.5°C goal will have
deliver a credibility assessment for
seen global CO2 emissions reduce by
the first two. They indicate what the
2. PROFITABLE NET-ZERO BUSINESS at least 40% relative to business as
company is actually doing to put their
usual, or at least 20% below business
commitments into practice.
MODEL as usual for the 2°C goal. These rates of
Company executives should have emissions reductions can act as useful
Source: https://www.oxfordmartin.ox.ac. business plans that ensure the benchmarks against which company
uk/downloads/briefings/Principles_For_ profitability of their business, and limit progress can be measured.
Climate_Conscious_Investment_Feb2018. supply chain risks, once emissions
pdf
5: NET-ZERO ALIGNMENT THROUGH
INVESTMENT AND ENGAGEMENT
High-impact entities: In line with the • High-impact entities : in certain Asset class coverage: This framework
5.1.2 DETERMINING THE POTENTIAL WILL A 1.5°C-PIVOT BE There is no standardised CVAR model,
since it is by definition able to reflect
FOR ALIGNMENT
NZIF, we apply a climate ‘materiality’ instances, we find individual applies to all our asset classes (equities, PROFITABLE? CLIMATE the specificity of each company’s
threshold to focus our energies on
those companies with the highest
companies have high carbon
footprints outside the high-impact
fixed income and alternatives), although
the details for how it is implemented
Once we have assessed an entity’s
1.5°C-alignment status according to
STRESS TEST exposures. We believe this is a better
approach, providing more rigorous
emissions profiles – both direct and sectors. To ensure we do not miss will vary to reflect the specific the OMS+ framework outlined above, Our methodology for assessing whether bottom-up analysis to truly understand
indirect. To do this we look for:26 these, we screen our holdings for characteristics of each asset class (see we need to differentiate between this transformation can be achieved the extent of the risks within a portfolio.
CA100+ focus list – see https:// an example for equities below). We also non-aligned companies according to profitably is our Climate Stress Test.
• High-impact sectors: these include www.climateaction100.org/whos- cover assets held through third-party their potential to align. This requires In 2022, we aim to develop equivalent
both sectors that have high direct involved/companies/ funds, where we focus on engagement forward-looking analysis to explore For equities, our Climate Stress Test approaches for our fixed income and
emissions (scope 1 and 2), but also with the relevant asset manager to how the entity could adapt its business involves a quantitative climate value alternatives asset classes that fit
those who are inextricably linked implement similar controls to our own. model to deliver a net-zero outcome in a at risk (CVAR) assessment based on a into existing analytical frameworks.
to high-emissions activities (scope 1.5°C-aligned policy environment.28 discounted cash flow model built around Sovereign debt requires a different
3). We use the Transition Pathway a 2050 net-zero scenario. This can approach and, again, we will be
Initiative (TPI) high-impact sectors Critically, there are two questions deliver either expected downside to the developing a fuller methodology. In the
as a guide, adding in banks and also we seek to answer to determine current share price where a company case of allocations to external managers
real estate. whether the entity could achieve this is expected to be negatively impacted made through a limited number of
transformation: by the decarbonisation transition, or strategies, we will engage with the fund
upside in the event they will benefit. managers to seek confirmation of their
1. Will the entity still be profitable?
alignment with a net-zero pathway.
EQUITIES – SCREENING FOR 1.5°C-ALIGNMENT THROUGH SARASIN’S If this is the case, then there is a
far higher likelihood that it will be
In essence, this exercise seeks to
quantify how a company’s prospects
SUSTAINABILITY IMPACT MATRIX achieved. might be impacted by implementation WHAT ARE THE PROSPECTS
of the Paris Agreement. Importantly, it
All new equity investments are currently scrutinised for they have set adequate net-zero goals, interim targets, a
2. Are there good prospects for moves beyond a simplistic assumption FOR ENGAGEMENT?
engagement success? Change can that a higher carbon footprint will mean
their ESG impacts through our internal Sustainability Impact credible and supportive business (and capital expenditure) If we establish through our Climate
be achieved even with entrenched more downside risk. It takes account of
Matrix. Climate change is embedded within this. We are plan and whether they have 1.5°C-aligned accounts. We Stress Testing work that an entity could
boards, but we require some basic how government policy (e.g. a carbon
enhancing this element to incorporate the OMS+ Principles will also consider related evidence, such as if the company in theory chart a profitable transition
conditions to apply pressure. tax, or bans on the sale of certain
described above, as a basis for assessing companies’ undertakes misaligned government lobbying. path, and thus remain an attractive
degree of alignment to net zero. This will be applied in products) or shifts in consumption investment, we then need to determine
We employ different tools in this
the defined high-impact categories. Alongside applying Assessing companies' commitment to implementation patterns (e.g. lower demand for whether there is a realistic possibility
assessment depending on the asset
this to new investments, all existing high-risk holdings’ requires judgement, which our analysts are well placed international travel) could play out in that we could drive a Paris-pivot through
class.
assessments will be updated. to undertake given their detailed analyses of potential the market place and impact revenue engagement – either as an equity or
investment candidates and their sectors.27 growth, margins, capital expenditure debt holder. If net-zero alignment is
To establish companies’ current alignment status (fully requirements, asset values, etc. In too expensive or difficult, then there is
aligned, potentially aligned / aligning, or not aligned), we will short, it is more realistic and offers likely to be little point in encouraging
utilise a number of data providers in addition to the entities’ more insight into economic risks and a change and we are better off exiting
own reports to build a comprehensive view of whether opportunities. the position within a reasonable time-
frame.29
Critically, this tool also enables us to
interrogate different scenarios. For A range of considerations are relevant
instance, we can assume management to determining the potential for
ignores the impending policy changes, engagement success, from access
and carries on deploying capital on to the Board of directors, individual
a business as usual basis. This would director interests, governance
raise the downside risk for companies structures, the regulatory environment
that need to adapt. We can also explore and broader shareholder support for
steps that management might be likely change. None are conclusive. Deciding
to take to adapt, and even prosper, and whether to engage is inevitably a
see whether they have a potentially judgement call, and success depends
profitable Paris-pivot pathway. heavily on the time and effort made
alongside the external situation that
Alongside decarbonisation policies, we
presents itself.
use CVAR to consider how the physical
impacts of climate change may impact We outline in detail our current approach
companies, such as damage to property, to engagement, the impacts we have
plants and equipment. had, and how we propose to deliver this
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INVESTMENT AND ENGAGEMENT
element of our NZAM in Section 5.2. Where certain instances – particularly where the issuers are not open-ended. We expect to achieve a net-zero commitment
we do not believe we are able to drive listed – this can be challenging. We plan to explore how we can with demonstrable progress on other items within three
the necessary transition to net zero, then effectively extend our engagement approach to governments years. Where we do not see evidence of this transition, then
we would look to exit the holding within – likely in cooperation with other investors – to support our we would sell the company’s shares.
12 months (see Section 5.4).30 sovereign debt holdings.
Escalating pressure on the board
We always seek a constructive dialogue with the Board. Initially
5.1.3 RED ALERT FOR CARBON- 5.2.1 OUR OWNERSHIP DISCIPLINE we hold private conversations setting out our concerns.
INTENSIVE ACTIVITIES All equity engagements at Sarasin & Partners are governed by
Where appropriate, we will work with other like-minded
investors. Where private engagement fails to gain sufficient
For some clients we apply an ethical our Ownership Discipline, which can be found on our website.31
traction, we may escalate our engagement through actions
screen: This sets out the steps taken to establish a dialogue with the
such as publicly disclosing our concerns and calling for
governing body of investee companies, and what steps we
“Not to invest where thermal coal or tar change; using our vote (see Box on our Climate Voting Policy)
take where threats to capital emerge. We detail escalation
sands represent over 5% of revenue to apply pressure on directors; reporting breaches of director
tools we may deploy, from voting against Board directors, to
unless we can present a compelling case duties, or rules governing company reporting to shareholders;
public statements, shareholder resolutions or complaints
that this investment would permit us to filing shareholder resolutions or in extreme cases putting
to regulators. We also outline where we will decide to sell
engage to catalyse net-zero alignment in forward director candidates.
securities if the risks become too great, and engagement fails
the entity, and thus wind down of these to deliver sufficient action. Feedback into investment decisions
activities.”
As with all our engagement work at Sarasin & Partners, we
gain insights through engagements and these are routinely
This is a matter of choice for individual 5.2.2 NET-ZERO ENGAGEMENTS feeding back in our investment analysis. Engagements above
client mandates, but in practice, given
the process outlined above, it is unlikely Our net-zero engagements employ all the key elements of all enable us to understand better how well-run companies
we would invest in companies with our Ownership Discipline. We prioritise high-risk companies as are, and their preparedness for the decarbonisation underway
significant activities in tar sands or detailed above, that have been allocated to the amber bucket across the world.
coal. As a consequence of the ethical in figure 4 (i.e. not aligned today but could be and we can
screen, we have in place controls to flag envisage a profitable pathway to net zero). Figure 5 outlines
the approach.
5.2.3 FIXED INCOME AND ALTERNATIVES APPROACH
wherever this threshold is triggered, and
any new equity idea is checked against In the case of our fixed income and alternatives’ holdings, we
Key features of our approach include: are also committed to pressing issuers to deliver a net-zero-
this screen.
aligned strategy.
Prioritisation
In these cases, under our NZAM we would
Engagements are strictly prioritised to ensure we target The key challenge for creditors, of course, is that they do not
normally exclude the entity from our buy
companies 1) in high-impact sectors as defined in Section have a vote at company meetings, or other powers to convene
lists unless, as set out above, we had a
5.1 above; 2) where there are core strategic misalignments meetings. But they can exert influence in many of the other
strong and compelling case as to why
with the Paris goals using our OMS+ methodology (see Section ways outlined above. Particular moments when creditors
we expect the entity to shift onto a 1.5°C
5.1.1); and 3) where we believe we can effect change that have leverage are prior to new issuances – when the terms of
pathway in the near future.
delivers enduring value for shareholders. the Security Trust and Intercreditor Deeds (STIDs) are set, and
when bond holders get a vote on a corporate action. We may
Thorough analysis
5.2 ENGAGEMENT Unless we can present a well-researched and compelling
also engage at other times and in some cases, we undertake
APPROACH case for change, we will not gain traction with the broader
joint engagements when we hold both shares and credit for
the same issuer.
shareholder base or the Board of Directors, which is essential
As already emphasised, our approach for success. The focus is on capital allocation and strategy, In the case of alternatives, we normally invest via listed
to 1.5°C-alignment is rooted in our but we also consider operational matters. Our analysis frames closed-ended funds, so our engagement approach mirrors
conviction that real-world reductions in the importance of net-zero alignment in terms of core that for equities. The main difference is that one is frequently
emissions will be more likely delivered director duties to protect and enhance long-term shareholder engaging with a fund manager, who then invests in operating
through concerted investor pressure capital. companies. In other words, the relationship is with an
– both from equity and bond holders –
intermediary rather than the operating entity direct, so we are
than a simplistic focus on divestment. Clear engagement plan with targets
seeking affirmation that they are in turn pressing underlying
We further believe that we have Where we initiate more involved engagements – in cases
companies to align with a net-zero outcome.
responsibilities to monitor and press where there is material misalignment with the Paris
issuers to act sustainably in order to Agreement – we set out clear goals and activities in an Process
protect capital. Consequently, ensuring Engagement Plan. In all cases, we look for alignment with the Normally, we engage with issuers via one-to-one meetings,
robust and disciplined engagement is a OMS+ principles outlined above, including an explicit net- group meetings and email inquiries. A combination of direct
central part of our net-zero commitment. zero commitment, supported by interim targets, a credible face-to-face interaction and written engagement is preferred,
This applies to companies as well as and profitable strategy and 1.5°C-aligned accounts. Having in order to establish a more personal relationship and more
other issuing companies, though in an explicit Engagement Plan enables us to track progress tailored responses to our questions. As for equities, we will
over time and remain focused on the impact we intend track our interaction with issuers, monitor the outcomes and
to have. These plans will inevitably evolve with changing report on our progress to clients. When engaging we will look
circumstances, but they provide structure for engagements for evidence that companies are doing what they say, using
and add rigour to the process. Our engagements are not
the overarching OMS+ framework outlined in Section 5.1.1.
20 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 215: NET-ZERO ALIGNMENT THROUGH
INVESTMENT AND ENGAGEMENT
FIGURE 5: SARASIN’S CLIMATE OWNERSHIP DISCIPLINE
SARASIN’S CLIMATE VOTING POLICY
Sarasin introduced its first climate-related voting rules in • The Remuneration Committee Chair – where
2017 at the same time as we initiated our Climate Active the remuneration policy lacks a ‘Paris-underpin’
strategy. Since then, we have expanded the companies we will not support it. A Paris-underpin would
the rules are applied to and their scope in terms of the permit the Remuneration Committee to block
votes that we consider. This is also consistent with our performance related pay that would otherwise be
2019 firm-wide Climate Pledge. We continue to focus on awarded for performance that runs contrary to
companies that rely on a carbon-intensive business model the 1.5°C pathway. We cannot support bonuses/
or value chain, but – for instance, in 2021, applied our rules LTIPS that are awarded for actions that worsen
to financials for the first time. climate change.
We do not see climate change as something to be • Auditor accountability: Auditors have a key role in
considered separately to core strategic or governance alerting shareholders to material mis-statements in
concerns that influence our voting, so where material, the accounts, or inconsistencies between the narrative
we use our assessment to decide our votes for director disclosures and the financial statements. We will
reappointments, remuneration, financial statements and vote against auditors (and their remuneration where
auditors. This differs to the leading proxy agencies, such as relevant) that fail to indicate how they have considered
ISS and Glass Lewis, who currently offer climate voting rules climate risks in their review of the annual report and
as an ‘add-on’ to their core analysis. accounts.
The main elements of our climate voting policy are: • Annual Report and Accounts: In line with policies on
voting for the Audit Committee Chair and the auditor,
• Director accountability: While all directors should be we will vote against an Annual Report and Accounts
held responsible for alignment with 1.5°C, we focus on: where there is inadequate disclosure of material
climate-related risks and their financial consequences,
• The Chair: Where the company has failed to
specifically within the financial statements.
explicitly indicate their strategy to align with a
conjunction with governments and like- fossil-fuel producers to use the cash 1.5°C temperature goal. • Remuneration policy / report: As outlined above, we
Prioritisation
As for equities, our net-zero dialogues minded institutions. flows they generate to invest into clean need to see details on how remuneration is adjusted
• The Audit Committee Chair:Where the company’s
are targeted towards issuers in 1) energy. to ensure performance-related pay is not made where
Annual Report and Accounts fails to provide a
high-impact sectors; 2) where there are activities are in contravention of the Paris Agreement.
strategic misalignments with the 1.5°C 5.3 CLIMATE SOLUTIONS Looked at this way, climate solutions detailed disclosure of governance, strategy
and – critically – the financial statement
Small adjustments, such as a 10% weight in an LTIP
may be delivered by all companies, old scheme, would not be sufficient to warrant support if
goal; and 3) our ability to effect change Too often decarbonisation is viewed just impacts from climate risks. Alignment with
and new. Consequently, we look for the overall package pays out for damaging activities.
(which will incorporate a consideration as a threat; as something that we need the recommendations from the Task Force for
innovation in all sectors. We are seeking a Paris-underpin.
of the size of the holding). to manage to avoid capital destruction. Climate-related Financial Disclosures (TCFD) is
While this is clearly a danger, there are Our approach to finding climate important.
As noted earlier, in certain cases –
also exciting opportunities to invest solutions is outlined below for each
especially for credit issued by non-
in climate solutions. Whether these asset class. We also comment on setting
listed companies – our leverage may
are linked to innovations that help targets.
be weaker. Another frequent constraint
reduce carbon emissions, or adaptation
is lack of disclosure. For instance,
activities to protect vulnerable
with Housing Associations there is a
communities and infrastructure from 5.3.1 EQUITIES • Low-carbon transport: Transportation accounts for • Environmental resources: The increased use of
lack of uniformity of reporting across approximately 25% of global CO2 emissions. Propulsion Environmental Resources to reduce emissions across
harmful sea-level rise or weather events, Sarasin & Partners is a thematic investor,
the sector. We therefore seek better systems are shifting to lower or zero carbon alternatives, a range of industries, while improved use of these
the opportunity set is wide. While the and Climate Change has been one of
disclosure first and foremost. such as batteries and fuel cells, complemented by resources can help water, agricultural and built
ultimate investment requirements our five core themes since 2018. We
remain uncertain, estimates range from see climate-related opportunities in an ongoing energy efficiency improvements. environment climate-related adaptation.
5.2.4 CLIMATE ACTIVE ADVISORY $2.5 trillion to $4.0 trillion per annum, a expanding range of areas that we group • Resource efficiency: The increased focus on reducing As of September 2021, just over 15% of our equity assets
significant increase from the current under five sub-themes linked to climate
PANEL $600 billion per annum spending.
emissions across all industries by increasing energy and under management is in these climate change sub-themes,
mitigation and adaptation activities, as material efficiency. This will be further complemented by and we anticipate this will continue to expand as we find more
In 2017, we created a Climate Active follows:
Our starting point is that the climate developing increased closed-loop consumption cycles. attractive investment opportunities.
Advisory Panel to help us consider
crisis demands both an urgent ‘Paris- • Low-carbon power: Industrial and
all matters related to investing • Infrastructure and buildings: The increased focus on
pivot’ from the ‘old energy’ players as domestic energy consumption is
against a backdrop of climate reducing buildings’ CO2 emissions (by some measures
well as a massive scaling up of new a significant contributor to global
change and the need for the world approximately 40% of all CO2 emissions). Simultaneously,
clean energy entrants. It is as important CO2 emissions. Energy generation
to decarbonise. The panel meets four many buildings are at risk from physical manifestations of
to reduce fossil-fuel investment as it is will shift from fossil fuel to
times a year, supplemented by informal climate change and require protection or adaptation.
to ramp up clean energy investment, renewable energy sources, (such
communications between meetings,
because without the former we will not as wind and solar) requiring the
to discuss divestments, corporate
bring down emissions. Also, there is a ability to manage greater supply
engagement and activist policies,
substantial opportunity for the existing intermittency.
together with potential policy work in
22 | Sarasin Net Zero Action Plan 2022 Sarasin Net Zero Action Plan 2022 | 23You can also read
